And it’s not foreclosures and short sales
Commentary by Dennis Walsh
RISMEDIA, April 28, 2008-While many real estate professionals look to foreclosures as a source of business, another easier, more lucrative opportunity can be found from coast-to-coast.
Working the exhibit floor of several conventions over the last few months, we’ve enjoyed conversations with literally hundreds of brokers and sales associates regarding their current business and strategies for the future. And despite the continuing onslaught of bad news about the real estate economy, there’s a great deal of positive, creative energy out there working to turn the tide. That’s great news.
As always, significant changes in the market bring both challenges and opportunities. With the increase in homeowners struggling to meet mortgage obligations and the resulting increase in foreclosures, many agents are looking for opportunities in working with REO’s and short sales.
Unfortunately, while these look to be great opportunities, most are also finding them to be very challenging areas of business. Those with little or no experience find it difficult to secure REO listings. REO managers typically want to work with experienced professionals who can manage larger portfolios of homes over a wide geographic area. Those who land the listings find that this work can be both difficult and extremely time-consuming. Responsibilities include dealing with evictions, security, property maintenance and repairs, along with generating and maintaining mountains of paperwork to support it all. Further, lenders require listing agents to pay for maintenance, repairs and other costs up front for later reimbursement, which means substantial cash reserves are necessary just to get started.
Of course, in spite of these difficulties, we all know that some very hard-working brokers have built successful businesses around a specialization in REO’s and troubled properties. For others, however, the challenges and risks may simply run too high.
In the meantime, another tremendous opportunity exists, borne of the same economic conditions, yet far easier and potentially more lucrative than foreclosures. This business can be found in helping builders sell off their inventory of available new homes.
In markets both large and small, from coast-to-coast, builders find themselves with brand-new homes that must be sold. Unlike individual owners who may insist on unrealistic listing prices, builders saddled by ongoing carrying costs are highly motivated to lower prices and add incentives to get these homes sold. After you have invested substantial time and money in marketing a resale listing, your seller may simply choose to take that home off the market to wait for better times. Builders simply cannot afford that luxury.
As a result, in areas where new home inventory exists, those homes are most often the most competitively priced product available. In addition to competitive pricing, in many markets builders are piling on extras and incentives, including special financing and price guarantees. Unlike older properties, these new homes offer warranties on brand new appliances, materials and other components. In some cases, final selections can also be made, allowing buyers to choose their own colors, finishes, flooring and more.
Further, many builders are offering not just competitive co-broke commissions, but in some cases surprising commissions and bonuses. We talked to one agent, very new to real estate, who earned $60,000 in commissions in one month by positioning himself as a “new home buyer specialist”. Many others are growing their businesses this same way, and enjoying the opportunity to list and sell the existing homes of these new home buyers.
In addition to opportunities in new home co-broke business, many brokers are also finding greater interest from builders and developers looking for full-service sales and marketing solutions. In the more than 30 years I’ve been active as a builder, designer, consultant and new home sales trainer, I’ve never seen more interest from the builder community in broker participation.
The good news is that with the proper training and systems, supported by a reasonable amount of marketing, you can be up and running in this business quickly and easily.
Jim Fischetti, a broker with 20 years of experience based in Wake Forest, NC, completed his Certified New Home SpecialistTM certification training in 2006. In a recent conversation, Jim explained “By applying what I learned in the training and pursuing new home business, in the last 12 months I’ve added $400,000 GCI. While others are working to survive, I’m thankful to be enjoying my best year ever.”
What’s great is that these opportunities are here right now. While others hold on waiting for things to return to “normal,” you can you begin to enjoy increased business in today’s market, and position yourself for greater success in the markets of tomorrow.
Based in Newport Beach, CA, Dennis Walsh & Associates, Inc. is a source for training and sales tools for success in both new home sales and resale real estate business. More than 30,000 real estate professionals have participated in their Certified New Home SpecialistTM and Residential Construction CertifiedTM certification courses.
For more information, visit www.sellnewhomes.com or call 800.428.1122.